The Political Economy of Southeast Asia: Politics and Uneven Development under Hyperglobalisation (Fourth Edition) - edited by Toby Carroll, Shahar Hameiri and Lee Jones (eds), Cham: Palgrave Macmillan, Springer Nature Switzerland A.G., Pp. xxvi + 412, ISBN 978-3-030-28254-7, 978-3-030-28255-4 (ebook)

Abstract

The usefulness of this approach in Southeast Asia in 2020 can be queried for reasons that will be discussed in more detail below. But there can be no doubt that it has resonated with scholars working in countries and academic environments well beyond Australia. Only one of the three editors of this volume is based in an Australian university, and of the 19 contributors only three are based at Murdoch itself. Eight are based outside Australia, in a diverse range of institutions across the USA, England, Japan, and Hong Kong; although only one is from Southeast Asia (Indonesia). Indeed it can be argued that the Murdoch School has had greater influence on the study of Southeast Asia over the past three decades than any other Australian academic group, except perhaps those associated with the Australian National University.

The authors suggest that mainstream or neo-liberal economics is characterised by an emphasis on rolling back the state in favour of private enterprise, a preference for private sector delivery of services such as health and education, and a tendency to deride redistributive policies such as progressive taxation. They view neo-liberal economic analysis as more ideological than theoretical. In fact modern economics is a much broader church than Hameiri and Jones seem willing to concede. Many economists including several Nobel prize winners in the discipline would advocate a stronger role for the state in developing countries, particularly in the provision of public goods and services, including infrastructure, health, and education. They also accept that interventions including conditional cash transfers can play a useful role in reducing poverty. To equate modern economic analysis with the more extreme views of Tea Party activists in the USA is neither accurate nor helpful in assessing its role in helping to solve the serious economic and social problems that confront many countries across the world.

Hameiri and Jones are on stronger ground when they point out that the Northeast Asian developmental state model was in several respects a poor empirical fit in the context of Southeast Asia. In the decades after 1960, several countries in the region failed to expand education beyond the primary level at a sufficiently rapid pace to meet the growing needs of the labour market. In Thailand, serious labour shortages were emerging by the late 1980s, which drove up labour costs and encouraged many firms to relocate to lower-wage countries including China and Vietnam. Even Singapore was slow to learn from the Taiwanese and Korean examples and expand post-secondary education, especially in science and technology. It still depends heavily on skilled labour from abroad in high-technology manufacturing and in the financial sector. Indonesia inherited a meagre educational legacy from the Dutch colonial era, and was slow to expand education beyond the primary level, even when government revenues grew after 1970. The Philippines inherited a more extensive education system from the American period, and even today has a better educated labour force than most of its ASEAN neighbours. But its slow economic growth, especially in the last two decades of the 20th century, combined with quite rapid population growth, meant that the domestic economy could not absorb the output of the school and university systems. The Philippines began to export workers in the 1960s and the numbers of migrant workers have grown rapidly over the past five decades.

All this is well known and has been widely discussed in many studies of Southeast Asian economic development over the years, including those written by mainstream economists, as well as authors who might prefer to call themselves historical institutionalists. In explaining the very diverse development outcomes in Southeast Asia and elsewhere, what does the Murdoch approach have to offer beyond these other approaches? Hameiri and Jones claim that the crucial context for the Murdoch approach is provided by ‘the global set of class relations attending capitalism and the manner in which they relate to locally variegated patterns of investment, production and consumption as well as geo-political considerations’ (p. 17). They go on to argue that economic development does not occur just because technocrats, shielded from political pressures, implement ‘good policies’, but because there have been since the 1950s a set of global dynamics including the Cold War and globalisation that have pushed the Southeast Asian countries to follow a particular set of policies. This may well be true, at least compared with low and middle-income countries in other parts of the world that have failed to achieve the GDP growth rates achieved in Southeast Asia since the 1960s.

But these policies have also produced diverse outcomes across the region. This is made clear in Chapter 2, where Carroll produces a range of statistics on GDP, population, poverty rates, and other indicators referring to the labour force, international trade, and tax policy. Most of these indicators are reproduced uncritically from World Bank, the International Labour Organization, and Organization for Economic Co-operation and Development sources. For what they are worth, they show diverse outcomes across the region, although not much attempt is made to explain the differences. Why are the various poverty indicators shown in figure 2.1 so much better for Thailand and Vietnam than for the Philippines or Indonesia? Perhaps the superior Thai performance can be explained in terms of faster GDP growth in the decades from 1957 to 1997, but Carroll does not really engage with the data on economic growth. The Vietnamese data may be flawed, but indicators on both education and health do show that Vietnam has performed very well for a low-middle-income country that only seriously began to engage with the regional and global economy in the mid-1990s. Why the differences?

These are not questions that Carroll addresses; rather she stresses the fact that most countries in Southeast Asia have historically grown on the back of exports of raw materials. The export diversification into manufactured exports has mainly been based on low to medium technology products, often made in factories owned by foreign companies which can re-locate if local conditions, including wage rates, change. No country in Southeast Asia, not even Singapore, has followed the Taiwanese or Korean examples in developing their own national champions. After stellar growth in Singapore, and five decades of solid growth in Malaysia, Thailand, and Indonesia between 1969 and 2019, there is no Hyundai or Samsung to be found. Companies from Japan, Taiwan, and South Korea manufacture components and assemble products across Southeast Asia, taking advantage of cheaper labour, but the development of new products is done at home, or in other developed economies.

Many researchers have addressed these problems over the years, although Carroll does not discuss their work in any detail, perhaps because it does not always fit into the ‘Murdoch’ template. Several studies have contrasted education policy in Taiwan and Korea with that in Thailand, Singapore, Malaysia, and Indonesia and pointed out that whereas Taiwan and Korea educated ahead of demand, the Southeast Asian countries have under-invested in post-primary education. Perhaps the Murdoch explanation for this failure would be that many governments in the regions are dominated by powerful oligarchs whose interests would not be served by a more progressive tax system. The resulting failure to mobilise domestic revenues means that government resources for education and health are limited and often the best services are only available in the private sector, where fees are high relative to average incomes. Yet educational reform has occurred, and in recent decades countries such as Indonesia and Thailand have seen a rapid improvement in the educational qualifications of both the male and female labour force. To what extent are these improvements linked to smaller families and a desire by families to invest in their children's education? The complex relationships between demographic change and the development of human resources are not addressed directly by Carroll or by other contributors. References to education, health, or population cannot be found in the index.

The Murdoch School prefers to focus on the growth of large conglomerates, which have grown on the back of cronyistic links to ruling families, and which have not displayed much interest in building up internationally competitive industries in medium to high technology sectors. More broadly, they argue that despite the various regime changes that have occurred in the region, Southeast Asian countries continue to be ruled by oligarchies, where power is concentrated, and narrow elites dominate policymaking (Rodin and Baker, pp. 91–92). They argue that, despite the changes that have occurred in several countries since the 1990s, oligarchs have managed to regroup and use their financial and political power to maintain or even extend their control over the levers of power. Where significant decentralisation measures have been implemented (Indonesia is the main example cited), fresh avenues for corruption and patronage have been provided that have benefited various oligarchic groups. Although Rodin and Baker (p. 88) acknowledge that economic growth in many parts of the region has produced a growing middle class with consumption patterns oriented to those found in high-income countries, they argue that this new middle class is directly or indirectly dependent on the state and lacks both the will and the capacity to challenge oligarchic power—although they do admit that Southeast Asian oligarchs face challenges from new social forces such as non-governmental organisations.

Rodin and Baker do not produce much evidence to support their arguments about middle class dependency on the state. Some of the figures given by Carroll support an alternative view that in several countries in the region central governments are rather weak, and indeed might have become weaker over the past two decades. Government expenditures relative to GDP in most parts of the region are much lower than the OECD average, and in Indonesia have fallen since the 1980s. In Indonesia, Thailand, and the Philippines, it is far from obvious that the growing middle class is dependent on the state; recent research has suggested that many are working in professional, technical and administrative occupations in the private sector. While some large private sector conglomerates may be linked to powerful political figures, and depend on them for preferential treatment in the granting of contracts, their employees comprise only a small proportion of the middle class.

In their chapter on populism in Southeast Asia, Robison and Hadiz argue that politicians such as Joko Widodo, Thaksin, and Duterte have all sought popularity by adopting programs that aim to improve health and social welfare for poorer groups, as well as providing improved infrastructure in both urban and rural areas. In Thailand, Thaksin's brand of reforming populism was unpopular with Bangkok elites, and led to his overthrow by a conservative coalition of the army and monarchist forces, although some of his policies have been continued by subsequent governments. In Indonesia and the Philippines, it would appear that a combination of reasonable economic growth and social welfare policies have led to some decline in poverty in recent years, although disparities in income and wealth remain high. But Robison and Hadiz point out that ‘genuine social democratic’ parties have not emerged in these countries that are committed to further social and economic reform, so the policies of Duterte and Joko Widodo will be vulnerable to the ‘chaos and upheavals often unleashed by neoliberalising economic projects’ (p. 171).

Most of the other chapters in this volume take up the theme of growing social resentment brought about by ‘neoliberal economic policies’ that uproot large sections of the population, deepen inequalities, destroy old certainties and communities, and force both men and women into new forms of work that are often both precarious and unpleasant. It is implied that neoliberal policies are exclusively concerned with economic growth and ignore the powerful vested interests, at both the national and international level, who insure that most of the benefits of growth accrue to them and their associates, leaving large sections of the population marginalised and impoverished. Governments and politicians are seen as tools of these interest groups, and lack either the ability or the will to act in the broader national interest.

Given that most contributors to this volume agree with Hirsch that class, power, and social conflict are important determinants of development outcomes in Southeast Asia, it is perhaps surprising that no author really explores what these terms mean in the context of contemporary Southeast Asian societies. Most contributors seem to agree that the middle class is growing everywhere in the region but offer little guidance as to how the middle class should be defined or measured. Three decades ago, ownership of a motor cycle or a hand phone might have been sufficient to classify a person as middle class; but by 2020 these products are available to the great majority. And even if the middle class is growing, what are the implications for future conflicts? If class conflict is the inevitable result of capitalist development, then why is it that much of the recent conflict across Southeast Asia appears to have resulted from religious and ethnic antagonisms? Is class, however defined, really a useful concept in examining both the causes and consequences of economic change in Asia? Perhaps this question will be explored in future volumes from these authors.